Retailers hopeful low cash rate will be enough to stimulate pre-Christmas sales

PEAK retail industry body the Australian Retailers Association (ARA) said the retail industry is hoping the Reserve Bank of Australia’s (RBA) decision to keep the cash rate on hold at 2.5 percent will provide enough stability to stimulate pre-Christmas sales as the crucial festive season fast approaches. 

ARA Executive Director Russell Zimmerman said the RBA remains one of the few central banks able to offer that support to the economy globally.

“While retailers didn't receive their Christmas wish of an interest rate cut today, the industry remains optimistic that the festive trading period will soon be in full swing and the stable cash rate may encourage consumers to loosen their purse strings early-mid November in the lead up to Christmas.

“While in an ideal world the RBA would be able to lower interest rates even further to support small businesses, the fact that the cash rate has remained low for some time now has seen retail trade figures increase (albeit slightly) month on month.

“ABS figures released this morning indicated monthly retail sales for the month of September increased 1.2 percent (month on month). In order for sales to continue building momentum as Christmas approaches, and for the retail industry to return to a growth of 6 percent, the Federal Government and RBA must do all that they can to ensure that retail trade is fully supported as consumers start to plan their holiday shopping.

“Some areas of Australia have also felt the effects of upcoming state elections which may result in lower levels of consumer confidence – an issue that businesses could certainly do without at this crucial time of year. With states such as Tasmania (0.8%) Queensland (0.4%) and Northern Territory (-0.6%) all falling under the month on month growth of 1.2 percent, the RBA must continue to hold a steady hand and ensure these states return to a percentage growth closer to the national average.

“There has been talk that interest rates may start to rise in 2015 but retailers believe the RBA will need to continue to support the economy via low interest rates for some time,” Mr Zimmerman said.

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Since 1903, the Australian Retailers Association (ARA) has been the peak industry body representing Australia’s $265 billion retail sector, which employs over 1.2 million people. The ARA ensures retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia.

Visit www.retail.org.au or call 1300 368 041.